(Adds context, Lasserre quotes)
By Leila Abboud and Sophie Sassard
PARIS Feb 27 Bouygues, France's
third-place mobile operator, has hired investment banks HSBC and
Rothschild to advise it on a potential tie-up with larger rival
SFR, two people close to the situation said.
Vivendi's SFR, second-place in mobile behind
Orange, was put in play this week after Vivendi confirmed on
Monday that it had been approached for a deal by Altice
, the parent company of French cable operator
Bouygues is now evaluating whether to make a bid for SFR,
the people said, confirming a report in newspaper Le Figaro.
Yet, the construction-to-media conglomerate faces an uphill
battle given that merging the number two and three mobile
operators would certainly attract tough regulatory scrutiny, a
handicap Numericable would not face because it is not in mobile.
Low-cost mobile upstart and broadband group Iliad
is also studying whether to make an offer for SFR, said a person
familiar with the group's strategy. It could not be determined
if Iliad has hired banks to advise it.
A telecom banker said any combination of SFR with either
Bouygues or Iliad would be tough for regulators to sanction
given the large size the combined group would have.
"To some degree, Iliad and Bouygues have to look at SFR
again now, just as a matter of house-keeping and good management
because Numericable is moving in on SFR," said the person.
"My prediction is that the SFR and Numericable deal is what
gets done. The rest of it is just noise."
After five days of media reports on SFR's suitors, France's
top competition watchdog Bruno Lasserre told Le Monde newspaper
on Thursday that any consolidation would have to be approved by
him and he had seen no concrete proposals yet.
"If a deal for a merger among mobile operators comes before
us, we can say 'no' or 'yes but' without preconceived notions,"
"But these are complex deals that involve listed companies
and that need to be examined very closely."
The uncertainty around SFR's future looks set to continue as
the potential suitors stake out their positions.
Meanwhile, Vivendi has been preparing to split off SFR from
its other media businesses in a deal expected this summer.
But it could still opt for an outright sale of SFR if the
prices and terms offered are attractive, a person close to the
A decision on whether to move ahead with the split or accept
an offer to sell SFR would likely be made sometime in March, the
A spokeswoman for Bouygues was not immediately available to
comment. A spokesman for Vivendi declined to comment.
(Additional reporting by Gwenaelle Barzic; Editing by Maya
Nikolaeva and David Evans)